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In 1994, Massachusetts General Hospital (MGH), with its $1 billion budget and its dozens of thousands visits per year, is urged to find a new business model to resist cost pressure? In other words, how MGH could lower its costs while enhancing the quality of care provided?
Financially speaking, evidence shows that MGH's cost structure is so important that it hampers dramatically its profit margin. Considering Exhibit 1, the ratio of after adjustments on Total Operating Revenues does not even go beyond 2%. In fact, even if the whole industry faces huge cost pressures, it seems that MGH is underperforming compared to its local competitors (the Boston area does not count less than 9 other major hospitals)...
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